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Been researching and gaining various perspective on how the previous generation begin their dividend investing journey.
The theme of “time in the market” was central for all of them and it’s pretty amazing to see the compounding effect build up over time.
Dividend investing is for the long game, and that’s how I plan to approach investments. Would love to hear more from anyone in this community who’s in the dividend investing space!
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Tan Choong Hwee
22 Apr 2021
Investor/Trader at Home
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Yes, time in the market is certainly critical in reaping the benefits from compounding, and you will gain more if you reinvest dividends. I might add that it is not just for dividend investing, but also growth investing.
But compounding does cut both ways. If you pick a declining stock, the loss is compounded too, and might not be recovered by collecting dividends (if any).
Here is what I would look at for dividend stocks:
Does the company have a moat to keep a stable revenue and profits among its competitors?
Does the company have a track record of increasing its dividends over a long period of time (what some called Dividend Aristocrats)?
Can the company's Free Cash Flow sustain its dividend payouts?